If you’re a business owner who’s been dreaming about sitting on a beach rather than shoveling snow, you’re not alone. If retirement or the idea of extended vacations is appealing, here are some steps you’ll need to take to build a sellable business:
Hire and train people who can run the business without your daily input. Putting a strong number two in place will make your life easier in almost every way. If you’re trying to grow the business, you’ll be able to focus on that. If you’re feeling burned out, having someone else in charge of the day-to-day operations can dramatically improve your quality of life.
And when it comes time to sell the business, you’ll have more buyers and more options. Buyers are looking for companies that generate cash flow without the constant presence of the owner. No one wants to buy a business that requires them to work in the field all day and come home to do five hours of paperwork every evening. You probably have some skilled technicians who are ready to take on management responsibilities. Invest in them so you can work on the business rather than in it.
Put systems and processes in place to make your operations more efficient. Investments in technology can increase productivity and profitability. If you don’t already have a Customer Relationship Management system (CRM) in place, it’s a good idea to find one that fits your business. It will save staff many hours by providing easy-to-access reports on past service records and reminders for service agreement renewals.
You should also take time to calculate your lead-to-closed-sales ratio; your advertising and marketing budget should be tied to results. If the leads you’re paying for are not generating sales, you might need to invest in improving your sales script or training your sales staff.
Focus on selling service agreements and repair. It’s always a good idea to increase the percentage of your business dedicated to service and repair; you’ll stabilize cash flow over the year, keep your techs busy, and be more attractive to buyers when you’re ready to sell.
The value of your business lies in repeat business from customers; satisfied and loyal customers are also valuable sources of testimonials and word-of-mouth referrals. You should aim to limit new construction sales in your business. You can make good money in new construction, but developers don’t remain loyal to HVAC companies. Having too much new-construction business can also limit your buyer pool; lenders are often unwilling to finance deals in which more than 20 percent of a company’s revenue comes from new construction.
Review your pricing and make adjustments if necessary. Even if your sales are strong, your profitability has probably suffered if you haven’t raised your prices in a while. That’s going to matter when you put your company up for sale; your profitability has a direct impact on what a buyer will be willing to offer.
You should review your pricing annually and base your new price schedule on the true cost of delivering great service and quality parts. The end of the year offers a good opportunity to do this. You’ll have a full year’s worth of expenses to analyze, and it’s a little easier to announce your new pricing at the beginning of the year. Raising prices is never an easy decision, but you’ll be doing yourself a favor by taking this step now, before you put your company up for sale.
The good news is that if you make these changes this year, you’ll have a more profitable and less stressful business. You might feel re-energized enough to rethink selling (maybe just a couple of months at the beach, rather than permanent residency). Either way, you’ll have built a business that’s easier to run and that will attract more and better offers when you’re ready to sell.
